Maravi

Local investors had capacity to buy Zanaco - Lubinda

Local investors had capacity to buy Zanaco - Lubinda
By Kingsley Kaswende
Monday April 09, 2007 [04:00]

Kabwata member of parliament Given Lubinda has questioned government’s sale of 49 per cent shares in the Zambia National Commercial Bank (ZNCB) to foreign Rabobank when willing Zambian investors had the capacity to pay the US $8.25 million price. Lubinda also wondered why the Bank of Zambia was “pressured” into granting Rabobank a waiver to own more than 25 per cent shares in ZNCB when there were alternatives to the waiver. Commenting on commerce minister Kenneth Konga’s statement disclosing the details of the government-Rabobank transaction, Lubinda said he did not understand why the government insisted on selling the bank to a foreign firm.

“There were enough local investors with equal capacity and money to buy the shares for US $8.25 million. Why don’t we have faith in our own people?” he asked. Lubinda, agreeing that the sale of the bank was to eliminate abuse by political authorities, said there were local banks ably run by Zambians that had no political interference.

The Zambezi Consortium, a merger of a local firm Executive Capital Management and Africa International Financial Holdings Limited (AIFHL) had tendered their bid for ZNCB, but it was rejected.

However, commerce Permanent Secretary Davidson Chilipamushi said the Zambian bidders failed not on account of financial capacity, but “other considerations” that were looked into.

Konga told Parliament on Thursday that Rabobank paid US $8,250,000 to acquire the 49 per cent shareholding in ZNCB. Rabobank’s bid for 49 per cent shares, based on asset value of the ZNCB was US $10 million. ZNCB’s net asset value as at December 31, 2004 was US $20.5 million. According to Konga, Rabobank, in making their bid, took into account some adjustments such as the provision for consultancy fees, which cost US $1,750,000 to arrive at the net bid of US $8,250, 000. In accordance with sale and purchase agreement, 10 per cent of the offer price was received upon signing of agreement on Jan 22, 2007 and the balance received on completion on April 3, 2007.

The consultancy fees of US $665,000 were awarded to PricewaterhouseCoopers and DLA Piper Rudnick while the balance was given to other consulting firms. DLA Piper Rudnick assisted ZPA with all aspects of the transaction. The company’s senior associate in the London office Alan Barnett and Grant Henderson, legal director for Africa based in Lusaka, together led the multi-jurisdictional legal team advising on the deal. PricewaterhouseCoopers acted as financial advisers for the government with Corpus Globe providing local legal support. Rabobank were advised by their internal legal team and Zambian law firm Mulenga Mundashi and Company.

Konga, however, said the status of the bank had changed between 2004 and 2007 and there was therefore need to assess the change, which would result in a price adjustment as provided for in the sales and purchase agreement. “Government and Rabobank will appoint independent auditors to determine the net asset value of the bank at the completion date within 90 days. This will be the basis on which the price adjustment will be made,” Konga said. Konga said 51 per cent would be retained by the Zambian public (25.8 per cent) minority shareholders (0.2 per cent) and government (25 per cent). He said Rabobank had made commitments to offload four per cent to the farmers’ body, Zambia National Farmers’ Union and a further 20 per cent to the public.

The Bank of Zambia gave a waiver ensuring that government did not breach provisions of the Banking and Financial Services Act (BFSA which does not allow any investor owning more than 25 per cent shares in a bank)”.

But Lubinda wondered why BoZ was “pressured” to do so. “A waiver can only be given where there is no other alternative. But in this case there were other alternatives, which included selling 25 per cent to Rabobank and the excess (24 per cent) to another investor,” Lubinda said. Konga also said contrary to apprehensions and concerns by the Zambian public, the government agreed with Rabobank that it would maintain all existing rural banks for a minimum period of 10 years, with the exception of possible relocation of branches within a radius of five kilometres due to practical business reasons.

He said Rabobank had contractually committed to increase the number of rural branches by 20 per cent. He also said at completion of sale, Rabobank committed that all serving employees would be retained and no redundancies had been agreed. He said for unionised employees, redundancies if any would be in line with existing collective agreements and labour laws.

Labels: ZANACO

posted by MrK @ 4:44 AM